{ "episodeId": "SLP301", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "stephan_livera": { "name": "Stephan Livera", "role": "guest", "tag": "STEPHAN" }, "guest_2": { "name": "Guest 2", "role": "guest", "tag": "GUEST" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 9.07, "text": "Hi and welcome to Stephan Livera podcast, a show about Bitcoin. So right now I'm in Austin, Texas, so I'm excited to be back in Texas, here for some events, and obviously I'll be over in Dallas next week for Bitblock Boom, so I'm looking forward to seeing those of you listeners out there. And today, for episode three hundred and one, we're talking- About Bitcoin mining pools and whether they should be decentralized or can, whether they can be decentralized. So joining me is Pavel Morovic of Slush Pool and Brain, and then also Ryan Ellis of Laurentia Pool, and we talk about various concepts like why pools exist, how they are structured, some of the trade-offs, what do Coinbase payouts look like versus other methods, Lightning payouts, and scalability for mining pools. This show is brought to you by Swan Bitcoin, and as you know, I recently joined the team at Swan Bitcoin. Swan helps you accumulate Bitcoin with automatic recurring buys and instant buys. It's really fast setup and cheap to automate your stacking. Swan has a service called Swan Private, and this one is for high net worth individuals all over the world, corporates, businesses, trusts, even self directed IRAs, all of these entities can be onboarded to purchase Bitcoin. So if you want some direct access to a Bitcoin account expert who's available for one on one calls, so if you're interested, go to swanbitcoin dot com and click Click private at the top, complete the form there, and the team will get in touch. Now, if you're interested in the idea of Bitcoin DeFi Lend at Hoddle Hoddle is a peer-to-peer Bitcoin-backed lending platform. So, if you have stablecoins, you can lend them out, you can earn extra income. On the other hand, if you have Bitcoin and you need some fiat liquidity, well, you can collateralize against your Bitcoin, and this can be done globally and anonymously, there's no KYC. So, in this way, without selling your Bitcoin, you can" }, { "speaker": "stephan", "time": "02:00", "start": 120.0, "text": "Hold one key in the two of three multi-signature, so you know there is no rehypothecation, and HodlHodl doesn't hold your funds. This is peer-to-peer lending and borrowing directly between users. So with the platform, you set your terms and put up offers depending on how long you wanna borrow or lend and the interest rate. Go to lend.hodlholdl.com. Bitcoin mining is a very attractive proposition right now. If you are interested, Compass Mining can help you get set up. They've got all kinds of different deals and equipment available that you can go" }, { "speaker": "stephan", "time": "02:31", "start": 150.66, "text": "And have that sent to a hosting facility that has already been vetted by the team at Compass Mining, and then you can select your mining pool, and you will then receive Bitcoin. So there's a whole range of different ways to get involved. There are bundle options also for those of you interested, and in doing so, you can access industrial power rates and cheaper hardware rates as well, as opposed to what you might pay just as a retail or residential individual. So go to compassmining.io and sign up to start mining Bitcoin today. Now onto the show with Pavel. And Ryan. So, Pavel and Ryan, welcome to the show." }, { "speaker": "stephan_livera", "time": "03:04", "start": 184.14, "text": "Thanks for having" }, { "speaker": "stephan", "time": "03:05", "start": 184.7, "text": "me." }, { "speaker": "guest_2", "time": "03:06", "start": 185.68, "text": "Yeah, thanks." }, { "speaker": "stephan", "time": "03:07", "start": 187.34, "text": "So, Pavel, I think people know you pretty well. You've been on the show a couple times. Ryan, did you want to just introduce yourself to the listeners?" }, { "speaker": "stephan_livera", "time": "03:17", "start": 196.79, "text": "yeah, my name is, Ryan Ellis. I'm, owner of MineFarmBuy dot com and, LauraciaPool, dot org. I guess co-operator of, Lauracia." }, { "speaker": "stephan", "time": "03:29", "start": 209.06, "text": "Great. And any, any details there in terms of your background or at least what you're comfortable to share?" }, { "speaker": "stephan_livera", "time": "03:36", "start": 215.51, "text": "just a lot of logistics background, sales of course, and, you know, I guess," }, { "speaker": "stephan", "time": "03:42", "start": 222.13, "text": "yeah. And so Pavel, maybe just for listeners who aren't familiar with you, can you just give us a bit of a background on yourself as well?" }, { "speaker": "guest_2", "time": "03:47", "start": 227.3, "text": "Yeah, yeah. I have mostly, computer science programming background, but lately I do spend most of the, of my time trying to run the company, which is Like, brains obviously, but yeah, it's a completely different position for me, learning a lot of stuff, but I, I try to be as close to the tech and programming as I can. we do run a slash pool, we do have, this different branch in the company building, mining firmer, BrainSauce, BrainSauce Plus, trying to do other R&D, stuff in mining, space, especially Bitcoin mining space. So yeah, busy in, in this area." }, { "speaker": "stephan", "time": "04:30", "start": 269.58, "text": "Gotcha. Yeah. So the reason we wanted to have a discussion, and we weren't-- I think there was sort of, is it a debate? Is it a discussion? I think we're a little bit more on the discussion side, but there's been some discussion about this idea of should mining pools and should mining in general be further decentralized and how, what, what ways are feasible for it to decentralize? So perhaps we could start a little bit of how we got here. Maybe Pavel, you could help us explain why did mining pools even start in the first place? Why, why is that even" }, { "speaker": "guest_2", "time": "05:00", "start": 300.18, "text": "Yeah, it, it is pretty, pretty easy idea, right? If you're trying to mine Bitcoin, your chance of doing so successfully is pretty low if you don't have, large enough share in the whole hash rate market, let's say. So the pool solves the problem of you not getting, rewards frequently enough, basically spreading, variance and, and helping you get money very often, even though you, you don't have to be the one lucky to find a new block. So it's a group of people joining forces together to mine blocks." }, { "speaker": "stephan", "time": "05:36", "start": 336.19, "text": "Yeah. And so I guess just for listeners, if you're totally new, let's say if you were to just buy one ASIC machine and plug it in, you might be waiting in a very long time, if you weren't, if you were just trying to solo mine, let's say. And so that's part of the reason why the idea with pools, as Pavel was just explaining, you can think of it like it's smoothing out that the rewards for you so that you can" }, { "speaker": "stephan", "time": "05:59", "start": 359.26, "text": "This idea. Do you agree or disagree with Pavel there, or how would you wanna discuss, this idea of mining pools?" }, { "speaker": "stephan_livera", "time": "06:08", "start": 367.69, "text": "well, as far as, pooled mining, it's really, in my opinion, essential, so I don't see any disagreement there at all. With regards to a single ASIC, yeah, your reward cadence is very sparse, if that makes sense. I think a new ASIC, even, you know, the latest gen, probably Probably net you a block, fine within about fifteen thousand days, maybe, maybe less, thirteen thousand days. So pooled mining is, sort of, you know, the atmosphere we're in, you know, not necessarily by choice, but by necessity." }, { "speaker": "stephan", "time": "06:47", "start": 407.14, "text": "Gotcha. And so then I think the question then is more about how should those pools work, how should they be formed, and how should the payouts be done, because I think that's where maybe some of the disagreement might lie. So- Brian, do you want to spell out where your disagreement is?" }, { "speaker": "stephan_livera", "time": "07:03", "start": 422.73, "text": "Well, essentially, any pool operator can, you know, operate their pool the way they would like. I don't see, you know, much argument, in that regard. I'm not gonna tell, you know, Pavel and Slush, you know, how to do things, so to speak. So when we get sort of further into decentralization and, maybe topics like that, we, you know, might have But heads a little bit or a lot of bit, I guess we'll find out. But, as far as, Laurentia Pool, really just the, the model is, self custody, for miners. It's definitely not a pool designed for your small sort of home mining community. as much as I would like to be more inclusive, still the, the risks involved, you know, when you are mining, scores, like our- SPLNS and then I think Slush is on PPLNS, and you can correct me if I'm wrong there. But those are really models and scores driven around actual network mining versus, you know, sort of your flat rate PPS, score systems. And it's operation-wise, we're looking at For us with our Coinbase derived reward, you know, we're limited by firmware to a small user group, and that's where, we sort of utilize that to hopefully captivate industrial and enterprise. Prize, miners." }, { "speaker": "stephan", "time": "08:38", "start": 517.96, "text": "I see. So Brian, could you just spell out for listeners how is LaurentiaPool different from most of the other mining pools out there? What's the differentiating factor there?" }, { "speaker": "stephan_livera", "time": "08:47", "start": 526.56, "text": "Well, I think there may be another pool that operates as far as the Coinbase derived payout, but that is the biggest catalyst there is, receiving your mining reward directly from the network. And, reducing any intermediaries, focusing on self custody and ownership was just very important to me to, you know, collaborate with Kon and deliver, you know, something to market that we thought would be of high interest." }, { "speaker": "stephan", "time": "09:20", "start": 559.54, "text": "I see. And Kon is your partner in the mining operation or in the operation of Laurentia Pool?" }, { "speaker": "stephan_livera", "time": "09:25", "start": 564.54, "text": "Yeah, Kon has been, around a while. I'm not gonna really speak for him, I guess. So to speak. He co-author CG Miner originally. He's had his own pools, CK Pool, CK Solo, and all, you know, based around more of your, your sort of private and direct payout, so non-custodial environments." }, { "speaker": "stephan", "time": "09:52", "start": 591.67, "text": "I see. And so, perhaps it's time to go back to Pavel and get your, explanation. How, you know, how does Slush Pool do mining and then the mining payouts? If you could just outline a little bit of that process." }, { "speaker": "guest_2", "time": "10:04", "start": 603.68, "text": "Yeah, yeah. What a pool typically does is, as we, as we discussed, it jo-- it, it groups other people's hash rate. And then when a block is found, it is typically found to an address controlled by a pool operator. During the mining process, a lot of Of data is collected about the performance of various miners, and based on the hash rate provided to the group, to the pool, the miners are rewarded certain portion of the, found block. There are different scoring systems how you can calculate what you deserve based on your hash rate, in time, and some other various scenarios, but mostly every scoring system tries to somehow be the correct one or be, be, be right. Once there is Amount you're, you deserve known, the pool creates a transaction and sends the money to you. there are, various mechanisms, how to prevent, transaction dust and how, how not to send you too many transactions because you would have to, for example, pay a lot of fees for using a lot of outputs and so on. So typically, a miner can set up rules in what time, what frequency, what amounts the payouts should be done. So in On Slash, on Slashpool, for example, you can say, \"Hey, I want payouts when I mine zero point one Bitcoin and then send it to me,\" or do it daily or some, some other options, which gives you the bitcoins in more concise transaction outputs basically. There is obviously, drawback in it. Which is, the pool operator can hold the coins which you're deserving for some time. For bigger miners, it can be, and for example, in Slashpool case, it, it can be within an hour or hour and something, and you can send it to whenever, there is a block found, your reward is, big enough and, and transaction can go out because it's, substantial. In case of small miners, and it is still vast majority of our miners, it can take weeks. Even months before there is a reasonable amount for being paid out. And obviously there is, some risk associated with it, but it, it is a way how to prevent some technical issues with very small transactions." }, { "speaker": "stephan", "time": "12:28", "start": 748.12, "text": "Excellent. So put it in, in other words, it's essentially that because, you know, the miner, I guess the crucial difference here is in that sense, slash pool is custodial for a small period of time, or in the case of a small miner, it might be for a longer period of time until they've had enough to reach that That threshold until they actually get the payout. So I guess that's probably the key difference that I'm understanding. You guys correct me if I'm wrong there. And so I guess the, another interesting question people might be thinking is, and, and, and you mentioned, sorry, go on, Ryan." }, { "speaker": "stephan_livera", "time": "12:58", "start": 778.43, "text": "Oh yeah, I was just gonna interject. So our, Coinbase Drive payout, it's scored, weighted on share quality, quantity, and then at every block find, it is dispersed to each miner, individually. The Coinbase level." }, { "speaker": "stephan", "time": "13:18", "start": 797.67, "text": "I see. Yeah. And so that's part of that trade-off which we'll get to, and perhaps Pavel, if you could just explain the part around why you want to prevent dust, why is preventing dust a, a good idea?" }, { "speaker": "guest_2", "time": "13:29", "start": 809.09, "text": "Every transaction has some resource, resources associated with it. If you want to send a Bitcoin transaction, it needs to be put into blockchain. And we, let, let's not discuss some layer two payout schemes, which are completely outside of this, of these things. We, we investigated this before, but it's a completely different story, right? So if you want to put a payout on, directly to the blockchain, it has some cost. It takes block space, and so you, you don't want to, want to be allocating the space for very small amounts, because otherwise nobody would be able to basically send a transaction, and the fees would, go through the roof, and transaction, fees associated with the payout could be easily of the- size of the payout itself. So you want to prevent this, and as a pool operator, you need to consider the cost associated with sending the coins, because it, it is either direct, as every custodial operator knows Or indirect in terms of reserving space in Coinbase address, because the, the bytes in blocks are just bytes in blocks and they are limited. So Sending very small transactions has associated, price or cost" }, { "speaker": "stephan", "time": "14:50", "start": 890.01, "text": "with it, yeah. And essentially that it could be bad as well from the perspective of the person receiving lots of small amounts of coins, UTXOs, because then later when they go to spend it again, it's gonna be very costly for them. And so that can be quite a costly and maybe not as scalable approach. But I'm wondering as well, Ryan, what's your philosophy and thinking on that? And are you essentially getting around that by saying it should only be for large? miners who are doing the Laurentia pool approach, or do you have a different answer on that idea?" }, { "speaker": "stephan_livera", "time": "15:19", "start": 918.93, "text": "Well, as far as dust, I mean, there's really no argument there. Essentially, using block space efficiently is, I, I think critical. So, sending a dust transaction is really, can be impossible, depending on, you know, your setup Per byte, so to speak. Yeah. With Laurentia Pool and our, I guess since we're limited to including the pool fee to twenty Coinbase Drive payouts or TX, so those will be issued by the blockchain, and available within a hundred confirmations as a standard for the network And as far as limiting having the limit to our pool, you're-- we're likely not to receive, or a user miner, is likely not to receive a dust payout, based on the breakdown. But again," }, { "speaker": "guest_2", "time": "16:17", "start": 977.03, "text": "maybe may I have a question to you, because I'm not sure if I, if I understand how exactly, your, your pool is operating. So, d- you, you somehow limit the amount of outputs you're putting into the Coinbase, so to, to prevent dust, for example?" }, { "speaker": "stephan_livera", "time": "16:37", "start": 997.3, "text": "no, essentially firmware is the limit. so ASIC firmware, I guess, depending on manufacturer, will vary with the ability to put out multiple coinbase transactions, and that's sort of the position we're in. So a few years ago, a con had his own sort of group pool, not a solo pool, and you would literally see, post own payments, which would be your dust payments on His pool there. So with our pool, there's not a enough user count to attribute dust, unless there was maybe a very small miner, contributing to the pool against a larger set of, I guess, more, you know- Robust industrial or, enterprise miners." }, { "speaker": "guest_2", "time": "17:30", "start": 1050.36, "text": "Why, why do you think is the case that the firmware is preventing, this scheme? Because, we kind of know something about firmware and, but we definitely not know all the details of how stock firmware, for example, works, but firmware typically doesn't have any idea about number of outputs in Coinbase, because it's not, not a- Available information to, to the miners, right?" }, { "speaker": "stephan_livera", "time": "17:57", "start": 1077.4, "text": "Yeah. So as far as, the developers, I guess changing the code or, and I guess the argument would be to make it more efficient, but in that regard, limits, you know, pools such as Laurentia Pool, Cons, Pryor Group pool with allowing these ASICs to participate on the pools, with multiple Coinbase texts." }, { "speaker": "stephan", "time": "18:27", "start": 1107.31, "text": "So Ryan, are you able to comment which, are there any in particular that you could name or is it a general comment?" }, { "speaker": "stephan_livera", "time": "18:33", "start": 1113.26, "text": "Well, the biggest bottleneck right now happens to be Antminer, so being one of the more pop, manufacturers, and they're the catalyst to our limit in our Coinbase, pool. But so with AMP Miner we're only allowed twenty, TXs. So two are reserved for our pool operators, myself and Khan, and then we have eighteen open for users or miners." }, { "speaker": "stephan", "time": "19:06", "start": 1145.96, "text": "As in there are 18 potential pool users after accounting for yourself and Con?" }, { "speaker": "stephan_livera", "time": "19:14", "start": 1153.63, "text": "correct, yeah. So with that, as far as block space, we're not really looking at pulling away a lot of sort of size for such a small group. So as far as reward or not filling our blocks, completely, we, you know, like most pools, I imagine, take the highest fees. So whether that's a small transaction with a high fee or a large transaction with a low fee, but obviously larger in size because of The quantity of coins being moved, we're still able to compete as far as, a complete network block subsidy with other people." }, { "speaker": "guest_2", "time": "19:58", "start": 1197.99, "text": "Yeah, I think it's pretty common that, miners are understandably motivated to include as many transactions as possible or the optimization function is get as much transaction fees into the block as possible so that, the, the payouts will be the largest. It's pretty common strategy, and I, I don't imagine there is economically motivated miner not doing this, which probably most of the miners are, right? Maybe one comment to the firmware limitation. I don't think it is intentional myself. we did study a lot of available code bases for firmers before, because obviously you try to get as much information, as possible, and it is just stupid firmware. It's just stupid code with, buffers, Predetermined, before, and the Coinbase transaction is just sent as random bytes or opaque bytes. There is no parsing in it needed for the firmware. It just give me a bunch of bytes, then some space you can play with to mine, more efficiently, and then other bunch of bytes. And this is sent, to the firmware every single time when a new job is offered by the pool, which is roughly every minute, every thirty seconds. And all these bytes are Or just smash together, put some, random nonce in it and mine it. And the, the firmware obviously needs to do some, byte alu- byte manipulation. And the limitation, in my opinion, is just based on assumption That the Coinbase transaction has, some maximum size, and the, the assumption in the firmware is probably, not correct because valid transaction in Bitcoin, there, there are some limitations which are hard, but, that the buffer in firmware is not, big enough for it. And we, we can speculate obviously, about Is it intentional or is it just crappy software? And our, my, my strong opinion would be, just opinion would be, it's just crappy software. Because all the rest of the code base is basically, yeah, put a monkey, behind a computer and once it's doing something, it just, let's release it and it works so that we will copy it to the next generation, next generation, next generation. And unfortunately, in case of pools who try to do these things, they are obviously hit by this, limitation, which is sad, but because the transaction can be in principle larger, but unfortunately it cannot Be easily done or forced to the miners." }, { "speaker": "stephan_livera", "time": "22:43", "start": 1363.19, "text": "Well, I think intentional is probably a correct term. I don't know, I wouldn't say I mean, you could speculate if it is sort of disingenuous or, you know, as like an attack on Bitcoin. I, I don't know if I would go that far, but most of the operators or ASIC manufacturers, operate their own pools and sort of the consensus is in the pooled environment is typically a single, maybe multiple in two. Coinbase payouts to the pool. So seeing, even larger than that is probably just deemed as non-essential and that sort of Mostly my, you know, light interpretation of why these changes have, taken place." }, { "speaker": "guest_2", "time": "23:41", "start": 1420.92, "text": "Maybe I have a solution for you. I just thought about the limitation right now and- You, you could, you could do, s- trick like this. you can put one output to the Coinbase and keep it very small, to some address you control, and to the same block immediately after the Coinbase, you can put any number of payout transactions as you wish. You-- so you, you would decomp-decompose the first transaction immediately in the same block. And then you can just use all the transaction space, in the block and never hit the problem of like too large Coinbase transaction. And you, you wouldn't even discuss or show, but the, the problem then is the people won't see The transactions directly or the miners, but all your, all your bloc-blocks will be visible after that. So you could sidestep the problem of, Coinbase's, size limitation and not do any custodial thing if we don't understand that one transaction moves, to address A and immediately after that, A moves to one payout, A moves to, second payout, and it's slightly more complicated on the server side, but still doable. And maybe you could then support more than, eighteen users this way. Because in principle, I, I, I kind of like the, the idea of not, not holding the coins for longer period of time, but there are very strong technical limitations associated with it, and not all the miners really need it or want it, but there is some, some space or some people who can have this preference, and it's great if, there is some offering for them. But, yeah, maybe you could, you could try this. This thing, I don't see why it shouldn't work, but maybe I'm missing something." }, { "speaker": "stephan_livera", "time": "25:31", "start": 1530.69, "text": "Yeah, I'm not, Colin would be the, more technical person to have and sort of discuss, a lot of those characteristics, being so familiar obviously with the code he's developed. So I think with, us and having a Coinbase transaction, again, derived from the block reward is just probably the easiest solution to deliver sort of, I guess, the product that we are looking to, you know, bring to market as far as self-custody and direct payments, With, you know, without any intermediary sort of custodial solutions, which also helps us as far as, you know, managing our own organization so we don't have to manage payouts after the fact. everything is done to score and then at block, block time." }, { "speaker": "guest_2", "time": "26:29", "start": 1588.62, "text": "Yeah, but you, you kind of have to because, somebody has to define how the Coinbase transaction should look like. So you are ac-actually generating the Coinbase transaction to the block, so you're doing the payouts, but, the, the obvious, Pro for, pros for, the miners, the coins aren't ever controlled by you once they are mined, but, yeah, the outputs are still generated by your system, so you are doing the payouts in, in some way. So yeah, the" }, { "speaker": "stephan", "time": "26:57", "start": 1617.43, "text": "scoring, absolutely. Yeah. And so Ryan, if I could ask then, is the idea then with the Laurentia pool, is the idea that you're just openly saying we'll just have a smaller pool in terms of number of users, and in doing so, we'll be non-custodial? And that's one of the trade-offs you're, like, you know, you, you, you get what I'm saying? Like, it's you're custodial for less time because you just get that direct payout, but the trade-off is you just can't have as many users on the pool as compared to, let's say, Slush Pool, which could have many, many more users, right?" }, { "speaker": "stephan_livera", "time": "27:28", "start": 1647.56, "text": "correct. Yeah. So again, in the past, Khan was able to have thousands of users on this group pool before the firmware changes, you know, by that specific manufacturer we mentioned. And it, it's disappointing, but for me, as far as operational side, it actually makes my job a lot easier A lot easier, to manage a smaller group, so, I'm not gonna complain too much about it, but" }, { "speaker": "stephan", "time": "27:56", "start": 1676.42, "text": "yeah, lucky you." }, { "speaker": "stephan_livera", "time": "27:58", "start": 1677.64, "text": "Yeah, yeah, absolutely. besides, you know, having to field, the constant inquiries on, you know, bringing in their hundred terahertz, you know, ASIC and, you know, when they expect to pay out. So us having, the password and having our server locked is sort of to alleviate, that issue at the gate. You know, it kind of sucks to be a gatekeeper in that aspect, 'cause it would be nice to have, open pool that people could join in and join out sort of freely, but that poses more problems as far as keeping rewards consistent for the group as well. so for me operationally, it's, streamlined. And then we're able to secure our server and as far as getting, you know, I guess when we do finally get, hash rate on there, at a cadence that all the users or peers are willing to accept then." }, { "speaker": "stephan", "time": "28:58", "start": 1738.06, "text": "So, so Ryan, can I ask then, are you proposing this idea that, you know, more and more people should be using this kind of model, or do you just see it like this is a niche model? Like, I guess the question I'm asking is, how do you see this idea scaling to more and more people if each time you run this kind of pool, it's maximum of twenty people?" }, { "speaker": "stephan_livera", "time": "29:16", "start": 1756.19, "text": "Well, it kinda goes to our philosophy of pool, dispersion. So, I'm sort of in the mindset that decentralization in a pool environment is sort of unachievable, 'cause you're looking at, you know, centralized servers maybe outside a P2 pool. And that's, for us, you know, we can spin up a server, you know, in Australia, we can put one up in EU and sort of have segregated groups to, if there's demand for it. If we, you know, find this successful and people want, you know, sort of, I guess, quote this product, unquote, you know, we're happy to, you know, deliver that and continue to." }, { "speaker": "guest_2", "time": "30:02", "start": 1801.53, "text": "Yeah, but then, then, then, there, yeah, there is, there, there is a like inherent problem in, pool mining and decentralization, because the whole key point of pool is working as a group to limit the variance. So we, we can try to like cut the problem into several pieces, but there are basically two sides of the, of the centralization problem. One is money handling. Who controls, the coins and how, and can we double-check it, and can we prevent some like issues related to money handling? To a certain extent, this is Solved by, by I would say, in the, in the Coinbase, but you can argue that the server, centralized server, still makes the decision about who, who gets the coins. You can maybe slightly faster detect some possible fraud, but normally there's not so much problems related with, not getting money out of pool." }, { "speaker": "stephan_livera", "time": "30:59", "start": 1859.48, "text": "Yeah." }, { "speaker": "guest_2", "time": "31:00", "start": 1859.92, "text": "So this is one part which is centralized, who pays and, who controls the coins in any way. And the second part is who decides what block is being mined? Right? Who, who chooses the transactions, in the block, who constructs the block as a new candidate for extending the, the whole blockchain? And this is arguably the more important part of the whole centralization, decentralization, topic, because like how miners are being paid for the work is like transitional thing, it's, it's, it's a momentary thing. Once they are paid, it's Over, but the, the blockchain as, as a set of blocks and transactions, whatever, it's just being kept For a very long time and, and preventing somebody using the blockchain infrastructure, for example, by transaction, censoring or, or things like that, it has direct impact to the whole ecosystem. It's not like mining problem, where, me as a miner and you as a pool, we have an agreement that you are paying me properly and we can sort, sort this out by some wh-whatever agreement we make, and I can en-enforce it, maybe even by law or whatever. This is pretty, like, it's, it's just part of the mining industry, doesn't, expands to the whole Bitcoin space so much. But the, block selection or transaction selection is the whole-- it in-influences the whole Bitcoin space, or at least much more than the first part. And it is even bigger problem and even more complicated problem to solve. Because it goes directly against, we are behaving as one miner together in a pool, and once we want to address the second problem of choosing the transactions being mined on, then It can be done, but it's technically even more complicated than handling the money part. And this is something what we, we investigated, in Stratum v2 protocol, which, doesn't address the money part because we don't think it's a crucial thing and, and it has so many technical- Problems which aren't worth, like, working on because it just works even today we think, but the block construction or transaction selection part isn't addressed at all by any solution we, we are aware of which would be usable. And, yeah, I'm not, not claiming it's, Perfect, ideal, solution which we propose in V2, but still it's the best effort we are ever of. I think, and it's, it's addressed, yeah. Go ahead. I" }, { "speaker": "stephan_livera", "time": "33:53", "start": 2033.02, "text": "think for Stratum V2, I, I can agree that, it helps with the- Decentralization of the text selection, but still, again, I think the point where you are collaborating, with a pool still the miners with the highest hash rate are going to have the probability in their favor to have their templates, you know, propagated to the chain So that, still in itself is a little centralized, but it's still definitely, in a, in my opinion, a good move away from pools who like shadow mine and do very, I think devious, things like that in, you know, the pool environment. Yeah," }, { "speaker": "guest_2", "time": "34:48", "start": 2088.09, "text": "yeah, sure. But the, in ideal world when all miners are using certain V2, which I would like to see sometime, but I, I don't think it, it will happen in, in so, so broadly or whatever. In the ideal world when everybody would use, transaction selection and V2, then the block distribution would be the same as if everybody is solo mining. So, I, I can't imagine being in better. If somebody has, huge data center full of ASICs and he solo mines, then obviously he would have larger influence on what blocks will be mined. It's pretty direct, there is no way around that, and nobody wants to change it, I think, because it's just your right to choose whatever you want to, mine on, because you have the hardware, you made the investment, make your decision. And So by using V2, we could get as close as possible to this ideal, but, but still being able to solve the money distribution problem and variance smoothing problems we discussed before on the money side, paid by some, some level of centralization because somebody is providing the, the service of smoothing the variance, but it's a trade-off obviously." }, { "speaker": "stephan_livera", "time": "36:11", "start": 2170.59, "text": "That's where, scores like PPS, you know sort of attract miners as well, so getting a sort of flat fee for, your hash looks, in my opinion, good on paper, but, again, over time all block rewards should really even out and, with accelerated fees on pools that run PPS, You know, maybe there's some backdoor deals or whatever, but they're essentially miners are losing revenue over the course of a long period of time for that short term," }, { "speaker": "stephan", "time": "36:50", "start": 2210.31, "text": "So can we just dive into that a little bit? Like, what is the... I mean, it sounds to me like you have a dis-agreement, like a fundamental disagreement with the way points per share works. You know, what's your issue with that and what's the alternative that you're proposing?" }, { "speaker": "stephan_livera", "time": "37:02", "start": 2222.09, "text": "Well, the, I think the alternative, you know, it's really what we're doing with Laurentia Pool, and I think I, I made the point that a miner has the ability to choose. So that to me is, more important than anything else, having that ability Ability to, look at, you know, all the pools and the ecosystem and deciding, you know, what they're after specifically. So as far as myself and my interpretation of, you know, points per share being less ideal over time, you know, really just my My interpretation of, you know, scoring and pool mining. So for me, I would prefer- So could we just" }, { "speaker": "stephan", "time": "37:52", "start": 2271.58, "text": "dive into that a little bit further? You're saying it's your interpretation of the scoring. So what is it about the scoring of PPS that you don't like, just so we can try to understand where is the actual disagreement here?" }, { "speaker": "stephan_livera", "time": "38:03", "start": 2282.68, "text": "Well, there's a lot of things a pool can do with, your hash rate. So if they are just offering you points per share, you might not necessarily know, what- chain mining at any given time. granted, I think there's more transparency with pools than others, but, and some people do prefer to sort of profit switch, which I think is really, Net loss for them as far as working proof of work algorithms, 'cause moving from one chain to another, you're essentially disrupting your probability to block, block find, at least that's my interpretation of it. And, and doing so, you're Less likely to capture a consistent reward in that regard. So to me, the pool takes on extra risk with the PPS score, and in that they typically charge a higher fee. which, you know, again, is up to the pool operator and the willingness of the user to accept that." }, { "speaker": "stephan", "time": "39:10", "start": 2350.46, "text": "Back to the show in a moment. If you're thinking about Bitcoin security, you've gotta be thinking about the cold card, which you can get from coinkite dot com. The cold card is a small little device, it looks like a calculator, and essentially it can store the private keys for your Bitcoin and it can sign Bitcoin transactions. Now, the really cool part is this can be done with a micro SD card. 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So, so Pavel, do you wanna, jump in here with a comment or a question?" }, { "speaker": "guest_2", "time": "41:37", "start": 2496.95, "text": "the, the comment would be there is a lot of, like rewarding schemes out there, and obviously people can choose whatever pool they want, but, but the fee associated with the provided service, especially for PPS pools, it is paid with- Because, the randomness of rewards causes operational troubles. so it, it has economic value to get the money, getting regularly. You can plan much more, much better than you can if your, income is, I don't know, this month is ten percent of the next month, which can easily happen. So especially, PPS schemes are adding value to the miner, and obviously somebody can say, \"This is not important for me because my case is so that I don't need it.\" but most of the miners, especially the ones who may- Make a lot of like large investments, lending money, the, the regular payouts are super critical to them. Getting money for, mining operations without knowing that by burn, by running your miners, you'll be paid and what amount, it's just crazy for some like more economically sensitive people. if it's your money, it's your paid miner, then, yeah, obviously in the long term, You can solo mine, there is no fee associated, and it should w-work out, but yeah, it's a playing dice basically." }, { "speaker": "stephan", "time": "43:16", "start": 2595.77, "text": "Yeah, so I think that's the way to think of it is, i-i-it's similar to the variability smoothing aspect, right? That, you know, even if you were a worker working for your boss, and that boss is taking on the risk that he might not make a profitable product, but he's paying you regardless. And so I guess maybe it's a similar way here, because it's like, you as a miner, let's say I'm a small" }, { "speaker": "stephan", "time": "43:39", "start": 2618.71, "text": "For me to use that model, because if not, I'm taking on the full risk myself. So I guess maybe that, Ryan, that's maybe that's where what you were saying is more like, \"Oh, we should have these more, I guess, decentralized idea of smaller pools, but each of those users is bigger, such that they can maybe handle the variability and, you know, deal with it themselves.\" but I guess that is part of the trade-off, because you might be a mining operator person who has, well, you've got electricity to pay, you might be paying for racks Yes. You might be paying for staff, you might be paying various other, admin and operating expenses or buying new equipment. So would you agree with that kind of summary there, Ryan, or do you disagree with the way I was trying to summarize it there?" }, { "speaker": "stephan_livera", "time": "44:23", "start": 2662.62, "text": "Yeah, I have, no disagreement, with that at all. As far as, you know, score in relation to that, it's really up to the user to figure out the importance, you know, looking at industrial or enterprise type miners You know, some have boards of directors, others are just, you know, a group of guys that are, you know, sort of in a, you know, company or maybe a collective or something like that, and, you know, they work hard to, you know, do what, you guys described is secure their equipment, secure their power rates. You know, you gotta pay electricity and internet and, you know, any other bills associated, with most businesses as well. So having, I think, a regular payout system is, you know, it's captivating. Yeah. I won't disagree there, do I? I think that it's, you getting-- and I think that's the direction we're pursuing with Laurentia is really getting back to actual network Mining, even if that is, you know, solo PPLNS, SPNS, I think those score rates are very I guess I'm lacking, some of the verbiage I'm looking for. but those score rates are, you know, intuitive to how Bitcoin network operates and, you know, propagating block finds and the probability of. So when people, I think I had somebody talk about, you know, a large gap in, a block find for a pool, and I was just saying, \"Well, how many block finds did they find previously?\" And so we went through their history and looked at their hash rate and basically saw that they were, you know, quote, ahead of schedule, end quote. So the probability that they're gonna have a, you know, twelve-hour gap between a block find is, something that, you know, is just math you can expect to, you know- You'll have your reward within X amount of time." }, { "speaker": "stephan", "time": "46:33", "start": 2792.8, "text": "Okay. So Ryan, can you give us an idea, maybe, obviously things move around and so on, but as we speak today, August twenty twenty-one? Roughly how big does a miner need to be for them, for it to make sense for them to join Laurentia Pool as opposed to, you know, Slash Pool or some other pool, like a PPS pool?" }, { "speaker": "stephan_livera", "time": "46:50", "start": 2810.42, "text": "Well, based on our organization, it really depends on the other peers in our pool, so looking at the other users. So let's say, I think right now our commitment total is about forty, petahash. So if we were to get a large miner come in, you know, obviously the average we would need to hit a specific cadence would change, for, you know, the benefit of the pool, and then the reverse would be true. So a larger commitment or a smaller commitment, sorry, would increase that average for the remaining of spaces opening. As far as, you know, organizing the group, what I look to achieve is entry at a specific cadence, that works for people. So looking at like a, five-day, ten-day cadence specifically around your difficulty adjustments is, you know, what I'm looking for to bring a group in. I don't want to bring people in and, you know, not be able to set that expectation for them. And then, you know, still provide the caveat that, you know, this is-- there could be a gap. let's say we had seven hundred petahertz online, you know, we could approximate maybe a block fine per day, so if that cadence sort of extended, we could, you know, speculate and calculate really that we'll- Be due for a block soon, and then likely our next block would come quicker because of, you know, the gap in, the probability" }, { "speaker": "stephan", "time": "48:34", "start": 2914.25, "text": "Okay. And so I guess the idea in your, your vision then is that there'd be maybe more people who are, let's say, ideologically motivated to, quote-unquote, maintain the decentralization of mining, such that there were lots of Laurentia pools out there and have, I guess, more smaller pools. And I guess that's, I'm trying to understand your view. Is that essentially what you're trying to get at? Is that the idea you're, you're going for?" }, { "speaker": "stephan_livera", "time": "49:00", "start": 2939.83, "text": "I think you're, you're close there. So again, pool dispersion I think will help decentralization if it's us using, you know, Cons code over and over again, I don't see that as really, you know, decentralizing when we look at, text selection and things like that because we're gonna pull the highest fees possible. Likely if we, you know, put our code on another server, the text templates are gonna be similar or, you know, very similar. So as far as the, is it, is it a" }, { "speaker": "guest_2", "time": "49:31", "start": 2971.24, "text": "problem? I mean, let's imagine that there, there are some fees in the mempool, right? because people are just trying to send money. And if, transaction propagation in the Bitcoin network is efficient, then everybody in the world should basically see all the same transactions. Because once you, you send your transaction to the network, the nodes are just relaying the transaction to everybody, so all the miners, modular private transactions are seeing the same, same space. So it, it should be very natural that if you are trying to optimize your output, the value of block because it's economically making sense, then all the miners should make basically the same Same, same decisions. Everybody should build the same block. So like difference between one block and, another block for different pools doesn't make a lot of economical sense. The incentive for doing this isn't there. the, the key concept I think here is you don't want one person to control and force everybody to u- use this, this block, but you can collectively, decide This is the best block for me because if I am the person who is, finding it, then I'm getting the money, and I'm maximizing my, my output. And you can do the same decision and, and if you win, it's your money, if I win, it's my money. but we can still mine, the same block. Everybody can do it, and it's perfectly fine, right? Perfectly" }, { "speaker": "stephan_livera", "time": "51:11", "start": 3070.85, "text": "fine. but yeah, my point was towards, decentralization of- Text selection. So, my, I guess, assumption with Stratum v2 is the miner themselves would get to choose versus the pool. So us, sort of dispersing pools all over, I don't think would-- is not really a decentralization, I guess, Directive for us. So we, we don't really market ourselves as a decentralized pool, mostly moving hash rate from these larger pools that have, you know, nineteen is sort of our goal there." }, { "speaker": "stephan", "time": "51:53", "start": 3113.19, "text": "So it's, I mean, it sounds a bit interesting. I mean, to me, I'm not quite clear myself because it sounds like you're saying you're not necessarily pro decentralization of pools, but you want essentially less large pools And more small ones?" }, { "speaker": "stephan_livera", "time": "52:08", "start": 3127.64, "text": "I would prefer it. It's really, again, it's really not-- I mean, that's my preference to see better distribution of hash rate globally. But again, for us to distribute pools at all alone would be, again, not very decentralized. So looking at all the other pools, okay," }, { "speaker": "guest_2", "time": "52:28", "start": 3147.81, "text": "yeah, because you could be the, the, the next big centralized, entity just running two hundred- Hundred servers and just deciding by having a drink together and say, \"Hey, tomorrow we are going to censor, this company's transactions,\" and nobody would be happy with that, obviously, even, even though we would have" }, { "speaker": "stephan_livera", "time": "52:47", "start": 3166.52, "text": "to. Well, we, we wouldn't do that, but yes, in theory, I, yeah," }, { "speaker": "guest_2", "time": "52:50", "start": 3170.29, "text": "yeah, but the point is, you, you want to get into a state where this even theoretically cannot happen or we are as close as possible to not be theoretically possible. And the, the problem is, as" }, { "speaker": "stephan_livera", "time": "53:05", "start": 3184.84, "text": "far as Is decentralizing hash rate to me the going back to mining nodes, so putting that into core itself again. So whether you're just using your low power CPU, you know, there's thousands of nodes on our planet that are active and participating. So to have each one of them be a mining node, In my opinion, would be the best for decentralization. Is it gonna be profitable? No. Is-- Are you gonna find a block find eventually? But again, the probability is very minute." }, { "speaker": "stephan", "time": "53:47", "start": 3227.44, "text": "Right. But I guess, I mean, to the point Pavel was making earlier, it's theoretically possible that, you know, some, say, you, you, Laurentiapool has twenty, miners on there, and those twenty miners could collectively account for forty percent of the hash rate. Like theoretically, it's possible, right? Yeah. Sixty percent of hash rate. You know what I mean? Like, it's theoretically possible." }, { "speaker": "stephan_livera", "time": "54:06", "start": 3246.31, "text": "And that's sort of, I mean, we're competition-driven internally, so, you know, eighteen peers. Fighting essentially, you know, in a ring. Think of it as like a WWE, mayhem or whatever they, they call, those matches, you know, for the portion of block reward." }, { "speaker": "stephan", "time": "54:27", "start": 3267.12, "text": "I see. Yeah, I see. And so, let's talk a little bit about the scalability aspects because I know the brains and slash pool team put out some, tweets and a, a post talking about some of the scalability aspects of this, saying, \"Well, what happens if the Coinbase transaction gets too large?\" Large, it might not work for the smallest miners, or perhaps if that Coinbase transaction was really large, it's the first one in every block, so that means there's less space for non-miner transactions. So I'm wondering, maybe Pavel, do you wanna just touch on some of those aspects around scalability, and the approach, contrasting the approaches there?" }, { "speaker": "guest_2", "time": "55:00", "start": 3299.74, "text": "Yeah, sure. Well, we kind of" }, { "speaker": "stephan", "time": "55:02", "start": 3301.8, "text": "addressed some of them went through," }, { "speaker": "guest_2", "time": "55:03", "start": 3303.35, "text": "went through, the topic before. It all depends on the size of the transaction, like the amount you are sending. If you are Forced to do the payouts in very frequent manner, be, maybe every single block you're, mining, then, and there is a lot of users which is not the case of Florentina pools, but yeah, theoretically, if you would like to extend it to larger number of people, then you would be forced to use, I don't know, thousand outputs in every single block, and it would just be wasting space because you would-- you could Otherwise, use the same bytes for other people's transactions and being paid by doing so, because this is your main duty as a miner. You're helping other people's transaction to get into blockchain, and you're rewarded by, doing so. So, yeah, putting a lot of outputs this way, if it's bigger than reasonable, then it's just, pure loss, I think. And then some strategy of joining the transactions together. Maybe by just sending the payouts, less frequently for one single miner, it's a way how to reduce the, the allocated space in, in the block. and then obviously there's one aspect which is pretty technical and it is you as a pool, you're sending the Coinbase to every single miner whenever you're updating, the job being mined on. So you have to do it every, every, every time when a new block is found, but for optimizing your block value, pools typically send new jobs to miners once in a minute or thirty seconds, and if the Coinbase transaction is large, then you have to send physically all the outputs, the whole Coinbase transaction to it Every single ASIC participating in, in the mining, and it can be a lot of data, it takes a lot of time, if you look at, the timings when you, you try to send this job to, I don't know, ten thousand connections on your server, it can seem very fast on the software level because the buffers in operating systems are, just doing their work, but physically on the lines, it takes, non-negligible time Time and it decreases efficiency of mining because the receiver of the information, the, the miner, gets the data later and therefore reacts later and the, the, the delay is pure loss. It's a disadvantage, yeah, yeah, it's not mining. so when, when a new block is found, the distribution of the information is super critical. And once you, you're-- That's why even zero, zero block or zero transaction block mining is, or empty block mining is, Happening because of this speed, speed up distributing the work, the work, it, it needs to be in one packet, network packet, then you, you can do it pretty fast. but once, the information is larger, it just takes much longer, and, and you, you would have to scale up your operation, use, more physical servers so that the, the, the dis- the, the connections are more, spread around. And then- And you, you could push the same information faster. But, but at the same time, you're on the farm side and you, you have a lot of connections to the pool, and if every single miner needs to get all the data again and again, then it can be problematic on your, downstream connection from your IPs or whatever. And so you would probably use a proxy, but it is a technical discussion, but having this, Coinbase large is just lost everywhere. It is, it, it would be great to implement the, the hack we discussed before to put it to as a first transactions in the block and use just one hop internally in the block so that all these outputs would be hidden in the normal transactions and, because miners are getting only Coinbase transactions. in the job, this would be like zero cost. Obviously, you would use some space in the block, so the associated, price would be there, but not on the mining level. The mining efficiency would be completely perfect. yeah, so th-there are technical problems with the approach, even on the, like, very mining side." }, { "speaker": "stephan_livera", "time": "59:43", "start": 3582.56, "text": "Well, with, Cons code, it, it's interesting. Of course, he could elaborate more. It maxes out at a hundred Coinbase transactions in a block. Obviously, we're not able to scale to that size due to firmware. But propagating the next, I guess, that information really is, dependent on, again, you know, the size. So there's, again, no argument there. Our size is still very small with, you know, twenty Coinbase transactions." }, { "speaker": "guest_2", "time": "01:00:16", "start": 3616.8, "text": "Yeah, you're definitely not hitting the, the hard part of the problem, if, if the number is twenty." }, { "speaker": "stephan_livera", "time": "01:00:22", "start": 3622.93, "text": "And then I imagine all pools are, you know, using high- Grade servers and connection speeds. So really, I, I think latency with us being just a single master node could be an issue depending on location or even your- ISP, you know, satellite, has higher latency than, you know, fiber or cable would, et cetera. we've seen pings to our server that are sub three hundred milliseconds even from Australia to the USA, 'cause Kon's in Australia, so these are things, you know, we evaluated and we've looked at." }, { "speaker": "guest_2", "time": "01:01:05", "start": 3665.51, "text": "Yeah, but the pings doesn't matter in this setup. If, if you try to send, let, let's make some- Ridiculous example, which is completely like out of this world, but let's say you have to put one megabyte, Coinbase transaction to se- to every single miner, the ping just doesn't matter, because you would have to go through sending one megabyte to every connection, and what counts is when the last miner gets all the data, then, y-y- we, we can argue about averaging the, the thing. So let's keep the mi- the, the middle, middle connection who gets the the daytime in the middle. This is what should be measured, because that's the delay before you start to mine on the new block. And pink is just, an offset. You can't be faster than your network is, but then all the inefficiencies are adding on top of that. And So, so b- being, everything being the same, it is just smarter to send as less information or as small number of bytes as possible, because otherwise you're cha- you're offsetting yourself towards worse efficiency. And obviously you can get better servers, but again, if you have better servers, then sending more data is worse than sending less data. So" }, { "speaker": "stephan_livera", "time": "01:02:30", "start": 3750.02, "text": "Well, the, I guess the best way, large miners with, you know, thousands of these, asics, would be to proxy, and that's sort of something that, you know, helps alleviate, 'cause we can, you know, help manage everything on our own server, our own end, but really, you know, talking with clients and making sure that efficiencies on their side are just as optimal. especially when, you know, working with a, a pool based payout. Yeah, yeah." }, { "speaker": "guest_2", "time": "01:02:59", "start": 3779.6, "text": "Yeah, but, but it doesn't matter, because the proxy has the same problem. You have a server which, for example, has ten thousand downstream connections to the miners, one upstream to a pool. So the, the, the time to deliver the data from pool to the proxy is, let's say, the ping time, the, the, the ping time, no, no efficiency loss. But then the server being in the middle needs to distribute the larger amount of, data to every single connection as well. So you're paying the price on the local network, and okay, it's maybe a hundred megabytes, lane, then, but there is a switch somewhere, there is a one server needing to go through all the connections, maybe you can use two proxies, but whatever, w-won't you have ten thousand of machines, it just takes some time to distribute the information, even on the CPU level. But yeah, th-these are maybe non-like Differences which people aren't counting and not evaluating properly, but the point I'm trying to make is it is always better to not use the bandwidth if you don't have to, because, it's faster and you can measure even the, like, the, the efficiency is there. it can be, one good example, people are sometimes arguing about, pool fee, differences which are smaller than inefficiency caused by, like, wrong network setup and wrong proxy. But people just don't, don't look at these things, because it's super easy to point to a pool fee or some, other fee. It's a visible number, it's very simple to understand, but, a kind of frustration." }, { "speaker": "stephan", "time": "01:04:48", "start": 3888.14, "text": "Yeah, but it's an interesting point, Pavel. Ryan, do you have a, do you have a response or do you have any, question there?" }, { "speaker": "stephan_livera", "time": "01:04:54", "start": 3894.17, "text": "Yeah, as far, well, I guess he, Pavel got interrupted, a little bit there, but yeah, as far as connection, you know," }, { "speaker": "stephan_livera", "time": "01:05:05", "start": 3905.24, "text": "Going to win, but again, the probability of consecutive block finds within just a matter of seconds, for a pool is extremely low. within minutes, you know, obviously we've seen it happen, before. But as far as transferring data, I-- that, that's something I think every pool works hard to make efficient on their end." }, { "speaker": "guest_2", "time": "01:05:31", "start": 3931.82, "text": "Yeah, maybe for, one comment for people to understand, mining doesn't have memory, meaning it's the same thing to, the first second when you start to mine is exactly the same as the second second. You, you aren't having bigger chance of finding a block the longer you're mining. Your, your probabilities are still the same. So for, for example, if you start now, the chance of you finding a block with, within In the next ten minutes, it's exactly the same as if you mined the ten minutes, not find the block, and you're trying for another ten minutes. It's, yeah, it's crazy because we-- it's completely non-intuitive, but it works this way. So the first second is exact-- it has the same importance as the second second or the last second. so even-- once we, let's imagine we have one second delay. At the beginning, it is one six-hundredth of, typical block time. So you're losing one in six hundred, seconds in the whole process, and the, the, the price you're paying is exactly, in this proportion, no matter if it's first or last second. So, yeah, there, there isn't a lot of blocks found within first second, but the statistics just- work, it, it's, i-it's the same, as saying you're not seeing a lot of blocks being found exactly in two thousand seconds or third second. It's a similar thing, yeah, because there is a lot of seconds in the, in the first, first time that, that is, there is obviously some distribution for, for them, and the first second is better than the, three hundred seconds, but yeah, the, the timing, you can't go around the, the maths behind mining basically. Yeah, I think" }, { "speaker": "stephan", "time": "01:07:30", "start": 4050.04, "text": "that's a good point there. Also, are there any other things that start to break down as, say, the price or the sat per byte rises? So as an example, I mean, as we speak today, price is what, forty-five thousand or forty-six thousand, something in that range, and if you, if, if I look at mempool.space, the price to get into the next block is eight sat per vbyte. So that's a, you know? Like an average transaction fee today for next block confirmation is about fifty cents, but I could imagine if, you know, let's say the price was ten x, the price goes to four hundred fifty thousand, and instead of paying eight sats per byte, you're now paying, you know, eighty sats per byte. And well, at, at that point, we're, you know, if we're hitting a ten and a ten x, we're now talking about, well, it could be fifty dollar transaction or, you know, who knows, five hundred dollar transaction someday. Let's have these problems" }, { "speaker": "guest_2", "time": "01:08:21", "start": 4101.57, "text": "We have to work on the problem being that it is ten x and we have to solve the possibly second layer and a lot of super smart guys, are working on the problem for a long time and I'm keeping all my fingers crossed for, any progress in this area. But it would be great problems to have, right?" }, { "speaker": "stephan_livera", "time": "01:08:43", "start": 4123.62, "text": "Of course. Thank you. So, well, as far as block space, I mean, you're looking at, you know, the larger transactions are going to, I guess- It's, way more, so to speak. So likely you're gonna have more competitiveness, with, I guess, your general users, competing for, you know, that block space through their TX fees. And it's really like, we were just laughing about it's a great problem, for miners. we're happy to help, solve that. But there, yeah, Taproot, SegWit, things like that that, you know, reduce the size of transactions, I think we'll see more innovations in that regard on, layer one. Looking at layer two, I think as much as it's matured, it's still not quite there, when looking at pulling, you know, full block subsidy to a, lightning network Wallet. You, we'll get there. You know, there's creative people like the people on this have here that, you know, solve these problems and, you know, have, you know, the, the know-how and, the intuition as well to, you know, solve these things. So" }, { "speaker": "stephan", "time": "01:09:57", "start": 4197.08, "text": "Yeah. And Pavel, I'm curious while we're here, you, you mentioned earlier that you had explored the idea of lightning payouts for miners. Could you offer a comment for us or explanation, analysis there on, you know, feasibility of this? 'Cause I know, for example, I think NiceHash does already do this, but could you offer your thoughts?" }, { "speaker": "guest_2", "time": "01:10:14", "start": 4214.35, "text": "Yeah, one of the troubles associated with this is payouts are one way. Pool never gets money, right? So, and the most efficient way how to use secondly- Their solutions is if you allow people to send money both directions." }, { "speaker": "stephan", "time": "01:10:31", "start": 4231.18, "text": "Yeah, yeah, yeah. So that" }, { "speaker": "guest_2", "time": "01:10:32", "start": 4232.29, "text": "you, you can use the channel for like infinite time. So the idea was, let's pre-commit or commit some, some coins to a miner for channel payout channel And let the miners spend the coins through us as a hub, so that they can pay with the money being in the channel, and we can then send them back to the other side of the channel. And this could work for, for a long time. Yeah, but it-- so it's feasible, but it's feasible for small miners using the, the money for like paying. Yeah. Once there is no backflow, it doesn't work because it, it would be better just to send, the money directly. It's, costlier to make, make the channel and, and it, it needs to be like closed by other transaction if you-- And so on and so on. So once there is a miner who would like to use- The coins for paying for coffee or whatever, then this could work because we will always keep your wallet full, yeah. if you, if you mine and use it, and it's g-great idea, but it's kind of niche." }, { "speaker": "stephan", "time": "01:11:47", "start": 4307.17, "text": "But I could also imagine, let's say, maybe there's a synergy there for a mining pool operator to also be a lightning hub, right? To also be an operator like a routing node, and maybe longer term, that would kind of make sense because then they're doing the payouts to their miners Who are operating on that pool, and then those miners, and again, again, this is a long term thing, maybe in the long term, those miners might be in turn paying their expenses with Lightning, and so then, because it's coming through, you know, through the, let's say, slash pool, if slash pool was a li-lightning routing node as well as a mining pool operator, then maybe that model, but it's again, it's a time thing, and maybe we need to sort of close the loop there for people to be able to earn satz from mining and then spend their" }, { "speaker": "guest_2", "time": "01:12:32", "start": 4352.28, "text": "Open a channel with, payout instead of doing directly payout on chain so that there is an availability of using the money within, within the second layer, but it can be limited. Maybe we, we will just keep, I don't know, one point zero point zero one Bitcoin in, in such a channel and just do it once, and once the user" }, { "speaker": "stephan", "time": "01:12:56", "start": 4376.69, "text": "is going back and forward, then- Yeah, yeah." }, { "speaker": "guest_2", "time": "01:12:58", "start": 4378.75, "text": "So there are options, and I guess, somebody will do it. We definitely looked into the idea, but never prioritized the idea into, being worked on really. Yeah." }, { "speaker": "stephan", "time": "01:13:10", "start": 4390.82, "text": "And it is still early days, so it's not, yeah, it might not be feasible right now. Yeah, yeah. I'm, I'm keeping" }, { "speaker": "guest_2", "time": "01:13:14", "start": 4394.98, "text": "fingers, crossed for somebody doing it. It would, I think it would be interesting PR for the second layer, especially if some like well-known, pool does it and some prominent users, visible, would use it and say, \"Yeah,\" so it would be nice. But it's difficult to put money on marketing, projects only." }, { "speaker": "stephan", "time": "01:13:36", "start": 4416.69, "text": "Yeah, of course. Ryan, any comments from your side there? How does, you know, yeah, any comments from your side?" }, { "speaker": "stephan_livera", "time": "01:13:43", "start": 4423.8, "text": "Yeah, with, Lightning, I think it sort of opens that gate for, you know, that smaller miner to receive, you know, maybe that daily payout sort of thing. so to me, it's really intriguing, you know, I think for adoption pool side, there's obviously a lot of work to be done. My other point with the Lightning, you're also removing transactions from the main network Besides the channel opening and closing. So, you know, as far as, you know, helping keeping blocks full in the future, you know, I hope that's a, a problem, you know, we never have to really discuss, but maybe game theory if there's a lot of L2 how does that look, you know, when people are viewing them cool, so to speak? Yeah," }, { "speaker": "stephan", "time": "01:14:31", "start": 4471.82, "text": "I guess my perspective on that is we are still so extremely early that we just haven't hit the big numbers yet. I mean, I've seen, you might have seen those projections of a billion Bitcoin holders in five years' time or something like that. If we were really to hit those kinds of numbers, even just the channel open and close for all of those people would just be more than enough block space demand, to provide that, call it reserve demand or baseline, if you will. Add in all the people who are doing coin joins, 'cause they wanna do multiple rounds of coin joins, that's another base level demand for block space. I, I personally, I'm not worried, I think. And then also, it's not just channel open and close, there will be periodic rebalance or swap in and swap out, there'll be all sorts of things like that. So I'm personally not too worried there, I think it's, it's just, it's, it's additive to the Bitcoin network, even if it- Superficially looks like it's taking transactions off the chain, it just dramatically improves the overall value of using Bitcoin, because now you can use it fast and cheap and all of these fancy things once you're in the Lightning world." }, { "speaker": "stephan_livera", "time": "01:15:34", "start": 4534.48, "text": "I've been a, I guess a Lightning user, for quite a while, so operated a, a few nodes myself, and I, I really hope it, you know, I, I think we all hope it develops more, and it would be interesting, yeah, to see pool size how it could be utilized in the future for sure. Yeah." }, { "speaker": "stephan", "time": "01:15:54", "start": 4554.83, "text": "Alright, well I think those are probably the key questions I had, I think we've sort of discussed where we agree, disagree. Do you guys have any other comments or any areas you wanted to bring up, any topics you wanted to bring up?" }, { "speaker": "guest_2", "time": "01:16:06", "start": 4566.35, "text": "Nothing particular. I think we Went through a lot, a lot of, a lot of different, points." }, { "speaker": "stephan", "time": "01:16:13", "start": 4573.29, "text": "Yeah. Okay. I think we, I think we've spoken out most of those points." }, { "speaker": "stephan_livera", "time": "01:16:16", "start": 4576.76, "text": "Well, I, yeah, I think, most of the points, we were looking to cover are, you know, we, we did that. I think, just to sort of relay, you know, as far as scaling, you know, there's, there's only so much we can do with, you know, that firmware, software, that maybe not necessarily from brains in their OS, but from others, that are producing it. And is the sort of my, my biggest concern is anytime you're limiting anything, you know, how How does that affect the ecosystem? And then smaller pools with the variable payout, it, it's sort of a, a big topic because You know, there's not a whole lot a small pool can do until they, you know, get that nominal hash rate to really drive their, block find cadence." }, { "speaker": "stephan", "time": "01:17:17", "start": 4637.4, "text": "Right, yeah. And I, I presume then, maybe when a pool is getting started, they might have to just try and offer a discount or try to have their own miners to sort of bootstrap the initial hash rate to get it to a certain size," }, { "speaker": "guest_2", "time": "01:17:30", "start": 4650.09, "text": "but, yeah. Yeah, it's a, it's a tough job. Y-you have to have a lot, lot of great connections. actions and a lot of money if you would like to s-start from scratch, even providing some benefits, yeah, the capital needed for it is Super large, and I, I would think there is a better way how to spend the money you would have to have, in mining, just being a miner. And actually get, the, the coins out of the mining crisis, yeah? Like the investment for, if you would like to start, I don't know, PPS pool today, and if you run the numbers the probabilities of going bankrupt, it's, it's terrible. I, it's just better to use the coins in the miner. I, I would, I would do it myself, but I mean," }, { "speaker": "stephan", "time": "01:18:21", "start": 4701.46, "text": "you've already got a pool going, so, you know, it's different for you. Yeah," }, { "speaker": "guest_2", "time": "01:18:24", "start": 4704.5, "text": "but it's-- Yeah, it's a heritage, it's a, it's a luck. I'm super, super, super grateful for being in the position, because otherwise it would be almost impossible to, to get, get to it without having awful amount of- Of money." }, { "speaker": "stephan", "time": "01:18:39", "start": 4719.73, "text": "Yeah." }, { "speaker": "guest_2", "time": "01:18:40", "start": 4720.65, "text": "so." }, { "speaker": "stephan", "time": "01:18:41", "start": 4721.39, "text": "Yeah. Okay. So I guess, maybe let's have a closing thought from each of you guys on where you think, Bitcoin mining should be going in terms of the ethos of Bitcoin and potentially that idea around decentralization or what kind of ideals you have around Bitcoin mining and what people should be prioritizing when they're thinking about mining. So, Ryan, do you wanna start?" }, { "speaker": "stephan_livera", "time": "01:19:01", "start": 4741.59, "text": "yeah, I'd love to. so I think decentralization, you know, I, I'll probably always use that in quote- because I don't see pooled environment as decentralized. even our pool, even with a more decentralized payout, it's still a server that someone operates, in that aspect. So really driving mining back to the node level, I think will help in sparking decentralization. Again, it's not for-- it'd be more for ethos than profitability, of course, because essentially there's no s-sensing a node operator or a node operator if being sensed, you know, by their, you know, government or ISP or, you know, whoever. can hopefully find a way to still contribute, to the network, and then mining, thousands of nodes mining, even separately, is going to decentralize the network. And sort of, I think it'll move back to what it was, but pool mining as far as profitability, I, I don't really see that going away for, miners, whether they're, you know, small scale ASIC users or large industrial, enterprise," }, { "speaker": "stephan", "time": "01:20:31", "start": 4831.45, "text": "Yeah. Okay. And Pavel, any comments from you in terms of the direction you wanna see Bitcoin mining go?" }, { "speaker": "guest_2", "time": "01:20:37", "start": 4837.08, "text": "Yeah, some-something is what I would like to see and something what I predict. I don't think we will see, sm-smaller miners in larger numbers. It's just inevitable that miners are getting, bigger and they want to use some sort of service, typically some sort of service as pool. so I don't see A lot of change in this direction. But what I hope for is that these miners will understand the, the role of being a miner and being kind of responsible miner and trying to understand, understanding that controlling the block space and choosing what transactions will be mined, it is a big topic and they should think about it and participate whenever there is a possibility. And I hope we will get Get the V2 or any equivalent of Stratum V2 into production, and the decision makers on miner side will understand the importance of this, and we will get to the ideal of one node or one farm, one miner, and not pool, as close as possible by, by, using this, this kind of protocol of, or any an, an, an, an alternative, but there is none. Right now. So I would really hope people will understand and use these features to help decentralize as great as possible, but not on the money le-level, but on the blocks, block space level, which is achievable, in my opinion. So, whoever is ready to help with pushing Q2 or any better alternative, if there is some, I don't know. then please do it. everybody will, will be rewarded by, the whole Bitcoin, space being more secure, more decentralized, and we will remove the argument of big miners being somewhat in a powerful position, once we, deploy a solution like this. Yeah. So everybody would benefit." }, { "speaker": "stephan", "time": "01:22:50", "start": 4970.48, "text": "Yeah, personally, I'd love to see more and more people, get into Stratum v2. So Pavel, people who wanna find out more about you and- And, you know, Brains and Slashpool and obviously Stratum v2, how can they find you guys online?" }, { "speaker": "guest_2", "time": "01:23:02", "start": 4982.75, "text": "I guess slashpool.com team or something or Twitter. All right, I'll include the links in the show notes there. Brains dot" }, { "speaker": "stephan", "time": "01:23:09", "start": 4989.14, "text": "com. Yeah, and that's with two eyes, so people are clear that's two eyes. Yeah, yeah, yeah. and Ryan, where can people find you and Laurentia Pool?" }, { "speaker": "stephan_livera", "time": "01:23:17", "start": 4997.16, "text": "laurentiapool.org. You can contact me through, you know, I guess Twitter and Telegram, I use quite often, mine Bitcoin dot com obviously, is, my main project, you know, right now, sourcing all this equipment for all these, you know, ASIC users from one to a thousand. But, yeah, pretty, pretty easy to find me. You can probably knock on my door if you wanted to, but-" }, { "speaker": "guest_2", "time": "01:23:51", "start": 5031.12, "text": "do you have a good coffee? I" }, { "speaker": "stephan_livera", "time": "01:23:52", "start": 5032.48, "text": "have a great coffee. I, as a young man, I worked many years, brewing coffee, so I, I'm, oh, awesome, awesome. If we ever get together, I'll throw together a great coffee. Then" }, { "speaker": "guest_2", "time": "01:24:05", "start": 5045.09, "text": "it's, it's very much appreciated to have an invitation." }, { "speaker": "stephan", "time": "01:24:09", "start": 5049.91, "text": "Well, I hope to, I've enjoyed chatting with you guys, and I hope to, meet up sometime at a mining conference or something someday. So, thank you for joining me, guys. Yeah, thanks for having" }, { "speaker": "stephan_livera", "time": "01:24:18", "start": 5058.86, "text": "me. Thanks for having me. Great to speak with you both." }, { "speaker": "stephan", "time": "01:24:21", "start": 5061.92, "text": "I hope you enjoyed the discussion. Get the show notes at stephanlivera dot com slash three o one. Thanks, and I'll see you in the citadels." } ] }